14 September 2017
SOUND ENERGY PLC
("Sound Energy" or the "Company")
Corporate
For further information please contact:
Vigo Communications - PR Advisor Patrick d'Ancona Chris McMahon Alexandra Roper
|
Tel: +44 (0)20 7830 9700 |
Sound Energy James Parsons, Chief Executive Officer JJ Traynor, Chief Financial Officer
|
jj.traynor@soundenergyplc.com |
Smith & Williamson - Nominated Adviser Azhic Basirov David Jones Ben Jeynes
|
Tel: +44 (0)20 7131 4000 |
RBC - Broker Matthew Coakes Martin Copeland Laura White |
Tel: +44 (0)20 7653 4000 |
Statement from the Chairman and Chief Executive Officer
"Having long shifted the axis of our activities to play-opening work in Eastern Morocco, Sound continues to rapidly build a Moroccan exploration-focused onshore gas business hinged on strong European gas fundamentals, a strategic partnership with Schlumberger and our multi Tcf opportunity set."
Our journey so far, including the first half of 2017, has been a busy and exciting one, encompassing all the usual highs and lows of the exploration business. Crucially, and behind the scenes, we continue to grow our core Net Asset Value in Morocco and remain hugely excited about the company's prospects over the next year or two.
Following the disappointing result at Badile the board is currently reviewing the Company's Italian portfolio. It is important to put this into context; having long shifted the axis of our activities to play-opening work in Eastern Morocco, Sound continues to rapidly build a Moroccan exploration-focused onshore gas business hinged on strong European gas fundamentals, a strategic partnership with Schlumberger and our multi Tcf opportunity set. We are clear in our goals strategically, strong financially, and on the path to firming up the very significant upside on our acreage.
So far in 2017 we have drilled three complex wells safely, re-entered Sidi Moktar with gas flared to surface to fulfil the licence commitment, secured a further US$27.5 million farm out of select Eastern Morocco licences to Schlumberger, established the deeper Paleozoic play in Eastern Morocco and, finally, secured the acquisition of Oil and Gas Investment Fund's ("OGIF") interests in Morocco.
As we look forward, the further exploration and development of our Eastern Morocco portfolio (Tendrara, Anoual and Matarka) remains the Company's absolute priority. Here the exploration potential is being de-risked by a combination of aerial gradiometry, reprocessed seismic and 2,644 Km of new 2D seismic which are all underway and fully carried by Schlumberger. It is anticipated that the Company should be ready for further hi-impact exploration drilling shortly underpinned by the recently completed OGIF transaction. Meanwhile the field development planning for the already proven volumes continues apace, most recently with the receipt of an indicative offer from AFG to fund the main pipeline. Final Investment Decision is now expected early 2018. These will be important catalysts as we continue to move the company forward and build value.
We continue steadfast in our belief that the Eastern Morocco TAGI and Paleozoic is a completely new play for our industry and one which will over the next year or two prove both the making of our company and the making of the Moroccan Oil and Gas sector.
James Parsons
Chief Executive Officer
Stephen Whyte
Non-Executive Chairman
CONDENSED INTERIM CONSOLIDATED INCOME STATEMENT
|
Notes |
Six months ended 30 June Unaudited £'000s |
Six months ended 30 June Unaudited £'000s |
Year ended 31 Dec 2016 Audited £'000s |
Revenue |
|
378 |
529 |
833 |
Other income |
|
- |
715 |
715 |
Operating costs |
|
(169) |
(801) |
(1,110) |
Impairment of producing assets |
|
- |
- |
(5,455) |
Impairment of goodwill |
|
- |
- |
(1,704) |
Exploration costs |
4 |
(15,124) |
(28) |
(2,334) |
Gross profit/(loss) |
|
(14,915) |
415 |
(9,055) |
Administrative expenses |
|
(5,161) |
(2,346) |
(6,241) |
Group operating loss from continuing operations |
|
(20,076) |
(1,931) |
(15,296) |
Finance revenue |
5 |
37 |
2,717 |
1,364 |
Foreign exchange gain |
|
759 |
807 |
1,935 |
Other gains and (losses) |
|
|
|
|
- derivative financial instruments |
|
182 |
- |
583 |
External interest costs |
|
(116) |
(1,183) |
(3,769) |
Profit/(loss) for period before taxation |
|
(19,214) |
410 |
(15,183) |
Tax credit/(expense) |
|
- |
- |
1,744 |
Profit/(loss) for period after taxation |
|
(19,214) |
410 |
(13,439) |
Other comprehensive (loss)/income |
|
|
|
|
Foreign currency translation income/(loss) |
|
(167) |
631 |
375 |
Total comprehensive profit/(loss) for the period |
|
(19,381) |
1,041 |
(13,064) |
Profit/(loss) for the period attributable to: |
|
|
|
|
Equity holders of the parent |
|
(19,381) |
1,041 |
(13,064) |
Basic and diluted profit/(loss) per share for the period attributable to the equity holders of the parent (pence) |
3 |
(2.73) |
0.08 |
(2.52) |
|
Notes |
30 June Unaudited £'000s |
30 June Unaudited £'000s |
31 Dec 2016 Audited £'000s |
Non-current assets |
|
|
|
|
Property, plant and equipment |
|
1,811 |
6,952 |
1,729 |
Intangible assets |
4 |
31,828 |
14,204 |
28,060 |
Land and buildings |
|
1,581 |
1,493 |
1,535 |
|
|
35,220 |
22,649 |
31,324 |
Current assets |
|
|
|
|
Inventories |
|
705 |
327 |
331 |
Other receivables |
|
6,087 |
14,147 |
8,777 |
Derivative financial instruments |
|
2,135 |
- |
2,545 |
Prepayments |
|
201 |
116 |
320 |
Cash and short term deposits |
|
38,532 |
14,466 |
46,809 |
|
|
47,660 |
29,056 |
58,782 |
Total assets |
|
82,880 |
51,705 |
90,106 |
Current liabilities |
|
|
|
|
Trade and other payables |
|
10,649 |
10,028 |
12,604 |
Loans repayable in under one year |
5 |
- |
7,704 |
986 |
Provisions |
4 |
1,406 |
- |
- |
|
|
12,055 |
17,732 |
13,590 |
Non-current liabilities |
|
|
|
|
Deferred tax liabilities |
|
433 |
2,160 |
433 |
Loans due in over one year |
5 |
17,632 |
9,152 |
16,455 |
Provisions |
|
1,876 |
1,780 |
2,049 |
|
|
19,941 |
13,092 |
18,937 |
Total liabilities |
|
31,996 |
30,824 |
32,527 |
Net assets |
|
50,884 |
20,881 |
57,579 |
Capital and reserves |
|
|
|
|
Share capital and share premium |
|
147,371 |
86,868 |
135,667 |
Shares to be issued |
|
- |
- |
223 |
Warrant reserve |
|
4,090 |
3,209 |
4,459 |
Foreign currency reserve |
|
1,276 |
1,699 |
1,443 |
Accumulated deficit |
|
(101,853) |
(70,895) |
(84,213) |
Total equity |
|
50,884 |
20,881 |
57,579 |
The financial statements were approved by the Board and authorised for issue on 13 September 2017 and were signed on its behalf by:
J Parsons
Director
S Whyte
Director
|
Share capital £'000s |
Share premium £'000s |
Shares to be £'000s |
Accumulated deficit £'000s |
Warrant reserve £'000s |
Foreign currency reserves £'000s |
Total equity £'000s |
At 1 January 2017 |
6,651 |
129,016 |
223 |
(84,213) |
4,459 |
1,443 |
57,579 |
Total loss for the period |
- |
- |
- |
(19,214) |
- |
- |
(19,214) |
Other comprehensive income |
- |
- |
- |
- |
- |
(167) |
(167) |
Total comprehensive income for the period |
- |
- |
- |
(19,214) |
- |
(167) |
(19,381) |
Reclassification on debt settlement |
- |
- |
- |
369 |
(369) |
- |
- |
Reclassification on share issue |
18 |
205 |
(223) |
- |
- |
- |
- |
Issue of share capital |
646 |
10,835 |
- |
- |
- |
- |
11,481 |
Share based payments |
- |
- |
- |
1,205 |
- |
- |
1,205 |
At 30 June 2017 (unaudited) |
7,315 |
140,056 |
- |
(101,853) |
4,090 |
1,276 |
50,884 |
|
Share capital £'000s |
Share premium £'000s |
Shares to be issued £'000s |
Accumulated deficit £'000s |
Warrant reserve £'000s |
Foreign currency reserves £'000s |
Total equity £'000s |
At 1 January 2016 |
5,039 |
81,276 |
- |
(71,593) |
369 |
1,068 |
16,159 |
Total loss for the period |
- |
- |
- |
(13,439) |
- |
- |
(13,439) |
Other comprehensive income |
- |
- |
- |
- |
- |
375 |
375 |
Total comprehensive income/(loss) |
- |
- |
- |
(13,439) |
- |
375 |
(13,064) |
Issue of share capital |
1,612 |
50,425 |
- |
- |
- |
- |
52,037 |
Share issue costs |
- |
(2,685) |
- |
- |
- |
- |
(2,685) |
Shares to be issued |
- |
- |
223 |
- |
- |
- |
223 |
Fair value of warrants issued with bonds |
- |
- |
- |
- |
4,090 |
- |
4,090 |
Share based payments |
- |
- |
- |
819 |
- |
- |
819 |
At 31 December 2016 |
6,651 |
129,016 |
223 |
(84,213) |
4,459 |
1,443 |
57,579 |
|
Share capital £'000s |
Share premium £'000s |
Accumulated deficit £'000s |
Warrant reserve £'000s |
Foreign currency reserves £'000s |
Total equity £'000s |
At 1 January 2016 |
5,039 |
81,276 |
(71,593) |
369 |
1,068 |
16,159 |
Total profit for the period |
- |
- |
410 |
- |
- |
410 |
Other comprehensive income |
- |
- |
- |
- |
631 |
631 |
Total comprehensive income for the period |
- |
- |
410 |
- |
631 |
1,041 |
Fair value of warrants issued with bonds |
- |
- |
- |
2,840 |
- |
2,840 |
Issue of share capital |
53 |
500 |
- |
- |
- |
553 |
Share based payments |
- |
- |
288 |
- |
- |
288 |
At 30 June 2016 (unaudited) |
5,092 |
81,776 |
(70,895) |
3,209 |
1,699 |
20,881 |
|
Six months ended 30 June |
Six months ended 30 June 2016 |
Year ended 31 Dec 2016 Audited |
Cash flow from operating activities |
|
|
|
Cash flow from operations |
(3,308) |
(704) |
(2,826) |
Interest received |
37 |
51 |
96 |
Net cash flow from operating activities |
(3,271) |
(653) |
(2,730) |
Cash flow from investing activities |
|
|
|
Capital expenditure and disposals |
(370) |
(470) |
(945) |
Exploration and development expenditure |
(14,345) |
(3,173) |
(10,882) |
Net cash flow from investing activities |
(14,715) |
(3,643) |
(11,827) |
CSTI funding contract |
- |
(13) |
(14) |
Net proceeds from debt |
- |
5,292 |
10,248 |
Repayment of borrowings |
- |
(2,724) |
(5,435) |
Net proceeds from equity issue |
9,813 |
553 |
40,247 |
Interest payments |
(645) |
(461) |
(1,108) |
Net cash flow from financing activities |
9,168 |
2,647 |
43,938 |
Net (decrease)/increase in cash and cash equivalents |
(8,818) |
(1,649) |
29,381 |
Net foreign exchange difference |
541 |
875 |
2,188 |
Cash and cash equivalents at the beginning of the period |
46,809 |
15,240 |
15,240 |
Cash and cash equivalents at the end of the period |
38,532 |
14,466 |
46,809 |
|
Six months ended 30 June 2017 Unaudited £'000s |
Six months ended 30 June 2016 |
Year ended 31 Dec 2016 Audited £'000s |
Cash flow from operations reconciliation |
|
|
|
Profit/(loss) before tax |
(19,214) |
410 |
(15,183) |
Finance revenue |
(37) |
(2,717) |
(1,364) |
Impairment of goodwill |
- |
- |
1,704 |
|
15,124 |
- |
7,789 |
|
(2,327) |
7,104 |
9,035 |
Depreciation |
331 |
181 |
272 |
Share based payments charge |
1,205 |
288 |
819 |
Increase in drilling inventories |
(374) |
(327) |
(331) |
Gain on derivative financial instruments |
(182) |
- |
(583) |
Finance costs and exchange differences |
(643) |
376 |
1,508 |
Decrease/(Increase) in short term receivables |
2,809 |
(6,019) |
(6,492) |
Cash flow from operations |
(3,308) |
(704) |
(2,826) |
The primary non-cash transactions during the period related to the exercise of 9.6 million of 10.4p warrants in settlement of £1.0 million debt and issue of 830,565 shares as part settlement of the drilling services at the Badile licence, onshore Italy.
The condensed interim consolidated financial statements do not represent statutory accounts within the meaning of section 435 of the Companies Act 2016. The financial information for the year ended 31 December 2016 is based on the statutory accounts for the year ended 31 December 2016. Those accounts, upon which the auditors issued an unqualified opinion, have been delivered to the Registrar of Companies and did not contain statements under section 498(2) or (3) of the Companies Act 2006.
The condensed interim financial information is unaudited and has been prepared on the basis of the accounting policies set out in the Group's 2016 statutory accounts and in accordance with IAS 34 Interim Financial Reporting.
The seasonality or cyclicality of operations does not impact on the interim financial statements.
The Group categorises its operations into three business segments based on Corporate, exploration and appraisal and development and production. The Group's exploration and appraisal activities are carried out in Morocco and Italy. The Group's reportable segments are based on internal reports about the components of the Group which are regularly reviewed by the Board of Directors, being the Chief Operating Decision Maker (''COMD''), for strategic decision making and resources allocation to the segment and to assess its performance. Sales during the period arose from producing licences in Italy. The segment results for the period ended 30 June 2017 are as follows:
Segment results for the period ended 30 June 2017
|
Corporate £'000s |
Development & Production £'000s |
Exploration & Appraisal £'000s |
Total £'000s |
Sales and other operating revenues |
- |
378 |
- |
378 |
Operating costs |
- |
(169) |
- |
(169) |
Exploration costs |
- |
- |
(15,124) |
(15,124) |
Administration expenses |
(5,161) |
- |
- |
(5,161) |
Operating loss segment result |
(5,161) |
209 |
(15,124) |
(20,076) |
Finance revenue |
37 |
- |
- |
37 |
Gain on derivative financial instruments |
182 |
- |
- |
182 |
Finance costs and exchange gains |
643 |
- |
- |
643 |
Profit/(loss) for the period before taxation |
(4,299) |
209 |
(15,124) |
(19,214) |
The segments assets and liabilities at 30 June 2017 are as follows:
|
Corporate £'000s |
Development & Production £'000s |
Exploration & Appraisal £'000s |
Total £'000s |
Capital expenditure |
609 |
1,202 |
33,409 |
35,220 |
Other assets |
41,343 |
30 |
6,287 |
47,660 |
Total liabilities |
(18,980) |
(1,780) |
(11,236) |
(31,996) |
The geographical split of non-current assets is as follows:
|
UK £'000s |
Italy £'000s |
Morocco £'000s |
Development and production assets |
- |
1,202 |
- |
Land and buildings |
- |
1,581 |
- |
Fixtures, fittings and office equipment |
192 |
185 |
232 |
Goodwill |
- |
433 |
- |
Exploration and evaluation assets |
- |
4,539 |
26,622 |
Software |
88 |
5 |
141 |
Total |
280 |
7,945 |
26,995 |
|
Corporate £'000s |
Development & Production £'000s |
Exploration & Appraisal £'000s |
Total £'000s |
Sales and other operating revenues |
- |
529 |
- |
529 |
Other income |
715 |
- |
- |
715 |
Operating costs |
- |
(801) |
- |
(801) |
Exploration costs |
- |
- |
(28) |
(28) |
Administration expenses |
(2,346) |
- |
- |
(2,346) |
Operating loss segment result |
(1,631) |
(272) |
(28) |
(1,931) |
Finance revenue |
2,717 |
- |
- |
2,717 |
Finance costs and exchange gains |
(376) |
- |
- |
(376) |
Profit/(loss) for the period before taxation |
710 |
(272) |
(28) |
410 |
The segments assets and liabilities at 30 June 2016 were as follows:
|
Corporate £'000s |
Development & Production £'000s |
Exploration & Appraisal £'000s |
Total £'000s |
Capital expenditure |
274 |
6,678 |
15,697 |
22,649 |
Other assets |
22,802 |
62 |
6,192 |
29,056 |
Total liabilities |
(11,546) |
(1,938) |
(17,340) |
(30,824) |
The geographical split of non-current assets is as follows:
|
UK £'000s |
Italy £'000s |
Morocco £'000s |
Development and production assets |
- |
6,678 |
- |
Land and buildings |
- |
1,493 |
- |
Fixtures, fittings and office equipment |
38 |
170 |
66 |
Goodwill |
- |
2,160 |
- |
Exploration and evaluation assets |
- |
7,809 |
4,122 |
Software |
103 |
8 |
2 |
Total |
141 |
18,318 |
4,190 |
Segment results for the year ended 31 December 2016
|
Corporate £'000s |
Development & Production £'000s |
Exploration & Appraisal £'000s |
Total £'000s |
Sales and other operating revenues |
- |
833 |
- |
833 |
Other income |
- |
715 |
- |
715 |
Operating costs |
- |
(1,110) |
- |
(1,110) |
Exploration costs |
- |
- |
(2,334) |
(2,334) |
Impairment of producing assets |
- |
(5,455) |
- |
(5,455) |
Goodwill impairment |
- |
(524) |
(1,180) |
(1,704) |
Administration expenses |
(6,241) |
- |
- |
(6,241) |
Operating loss segment result |
(6,241) |
(5,541) |
(3,514) |
(15,296) |
Interest receivable |
1,364 |
- |
- |
1,364 |
Gain on derivative financial instruments |
583 |
- |
- |
583 |
Finance costs and exchange gains |
(1,834) |
- |
- |
(1,834) |
Loss for the period before taxation |
(6,128) |
(5,541) |
(3,514) |
(15,183) |
The segments assets and liabilities at 31 December 2016 were as follows:
|
Corporate £'000s |
Development & Production £'000s |
Exploration & Appraisal £'000s |
Total £'000s |
Non-current assets |
513 |
1,216 |
29,595 |
31,324 |
Current assets |
52,526 |
22 |
6,234 |
58,782 |
Total liabilities |
(3,161) |
(2,049) |
(27,317) |
(32,527) |
The geographical split of non-current assets is as follows:
|
UK £'000s |
Italy £'000s |
Morocco |
Development and production assets |
- |
1,216 |
- |
Land and buildings |
- |
1,535 |
- |
Fixtures, fittings and office equipment |
194 |
171 |
148 |
Goodwill |
- |
433 |
- |
Exploration and evaluation assets |
- |
8,511 |
18,876 |
Software |
89 |
6 |
145 |
Total |
283 |
11,872 |
19,169 |
3. Profit/(loss) per share
The calculation of basic profit/(loss) per Ordinary Share is based on the profit/(loss) after tax and on the weighted average number of Ordinary Shares in issue during the period. The calculation of diluted profit/(loss) per share is based on the profit/(loss) after tax on the weighted average number of ordinary shares in issue plus weighted average number of shares that would be issued if dilutive options and warrants were converted into shares. Basic and diluted profit/(loss) per share is calculated as follows:
|
Profit/(loss) after tax from continuing operations |
Weighted average shares in issue |
Profit/(loss) per share (basic) from continuing operations |
||||||
|
June 2017 £'000s |
June 2016 £'000s |
December 2016 £'000s |
June 2017 million |
June 2016 million |
December 2016 million |
June 2017 pence |
June 2016 pence |
December 2016 pence |
Basic |
(19,214) |
410 |
(13,439) |
703 |
506 |
534 |
(2.73) |
0.08 |
(2.52) |
|
Profit/(loss) after tax from continuing operations |
Weighted average shares in issue and dilutive potential ordinary shares |
Profit/(loss) per share (diluted) from continuing operations |
||||||
|
June 2017 £'000s |
June 2016 £'000s |
December 2016 £'000s |
June 2017 million |
June 2016 million |
December 2016 million |
June 2017 pence |
June 2016 pence |
December 2016 pence |
Diluted |
(19,214) |
410 |
(13,439) |
703 |
538 |
534 |
(2.73) |
0.08 |
(2.52) |
4. Intangibles
|
Six months ended 30 June 2017 Unaudited £'000s |
Six months ended 30 June 2016 Unaudited £'000s |
Year ended 31 Dec 2016 Audited £'000s |
Cost |
|
|
|
At start of period |
42,386 |
20,198 |
20,198 |
Additions |
18,186 |
4,000 |
21,352 |
Exchange adjustments |
(284) |
657 |
836 |
At end of period |
60,288 |
24,855 |
42,386 |
Impairment and Depreciation |
|
|
|
At start of period |
14,326 |
10,634 |
10,634 |
Charge for period |
13,761 |
17 |
3,559 |
Exchange adjustments |
373 |
- |
133 |
At end of period |
28,460 |
10,651 |
14,326 |
Net book amount |
31,828 |
14,204 |
28,060 |
During the period there was an impairment charge of approximately £13.7 million in respect of the Badile licence, Italy, following sub-commercial well results and in addition, approximately £1.4 million for the well abandonment costs was provided for.
5. Loans and Borrowings
|
Six months ended 30 June 2017 Unaudited £'000s |
Six months ended 30 June 2016 Unaudited £'000s |
Year ended 31 Dec 2016 Audited £'000s |
Current liability |
|
|
|
Other loans |
- |
7,704 |
986 |
Non-current liability |
|
|
|
5-year secured bonds |
17,632 |
8,125 |
16,455 |
Other loans |
- |
1,027 |
- |
|
17,632 |
9,152 |
16,455 |
On 21 June 2016, the Company announced that Greenberry S.A (''Greenberry'') had subscribed for 5-year non-amortising secured bonds with an aggregate value of the issue of €28.8 million (the ''bonds''). Alongside the bonds, the Company was to issue 70,312,500 warrants to subscribe for new ordinary shares in the Company at an exercise price of 30 pence per ordinary share and an exercise period of approximately five years, concurrent with the term of the bonds, to Greenberry ( the ''warrants''). The bonds are secured over the share capital of Sound Energy Holdings Italy Limited. The bonds have a 5% coupon and were issued at a 32% discount to par value. A total cash fee of €1.1 million was payable by the Company.
The warrants were recorded within equity at their fair value on the date of issuance and the proceeds of the notes net of issue costs were recorded as non-current liability. Part of the proceeds of the bonds was used to settle an existing Reserve Based Lending facility from Greenberry of €7.0 million at a discount of 50% reported within finance revenue. The Company also settled £7.0 million debt that had been issued to Continental Investment Partners in 2014. The coupon rate of 5% for the bonds ensures that the Company's on-going cash out-flow on interest payments is low and which conserves the Company's cash resources. The effective interest rate is approximately 16.3%. The 5-year secured bonds are due in June 2021.
During the period to 30 June 2017, the Company settled £1.0 million debt that had been issued to Simon Davies in 2014 and had an annual coupon of 10%. The debt was settled through the exercise of 9.6 million warrants at 10.4p per share.
|
30 June 2017 £'000s |
30 June 2016 £'000s |
31 December 2016 £'000s |
Liability component at 1 January |
986 |
7,118 |
7,118 |
Interest and amortised issue costs |
44 |
620 |
1,413 |
Interest paid |
(30) |
(306) |
(545) |
Debt paid |
(1,000) |
- |
(7,000) |
|
- |
7,432 |
986 |
As at 30 June 2017, the Company had 731,514,432 ordinary shares in issue. In the period to 30 June 2016, a total of 54.2 million warrants were exercised for total proceeds of £9.8 million and 9.6 million warrants were exercised in settlement of a debt (note 5).
During the period to 30 June 2017, the Company granted 11.1 million share options to staff under its long term incentive plan. Approximately 3.8 million share options expired during the period.
On 21 July 2017, the Company announced that it was progressing well with its acquisition of various licences in Eastern Morocco from OGIF (the "Acquisition") and is expecting completion of the Acquisition at the end of Q3 2017. On completion of the Acquisition OGIF will be issued with 272 million new ordinary shares in the Company which was approved by the Company's shareholders on 15 March 2017. The Company has entered into petroleum agreements with Morocco's Office National des Hydrocarbures des Mines ("ONHYM") for Anoual and Matarka licences, on shore Morocco. These agreements will come into force at the same time as completion of the Acquisition. A bank guarantee of US$2.95 million had been lodged by the Company and its partners to cover a proportion of the work commitments under the licences.
On 5 July 2017, the Company announced that the re-entry of the Koba-1 well at Sidi Moktar licence, onshore Morocco had been successfully complete and flared gas at surface. The Company expected to undertake a rigless extended well test.
On 1 August 2017, the Company announced that it had received written confirmation, from a local authority in Eastern Morocco, that preliminary approval had been provided for the proposed route of the gas export pipeline that will be necessary to transit gas from Sound Energy's Eastern Moroccan interests to the Gazoduc Maghreb Europe (GME) pipeline.
On 3 August 2017, the Company announced that it had received final approval for the Matarka Licence, which has been granted with an effective date of 27 July 2017. The Company expected to receive the remaining approvals in relation to the Anoual and Tendrara licence areas by the end of Q3 2017.
On 4 September 2017, the Company announced that it had received an indicative non-binding commercial proposal (the "Indicative Proposal") from Advisory & Finance Group Investment Bank ("AFG"). AFG is a Moroccan based financial institution which acts as fund manager to OGIF, the Company's partner in Morocco. The Indicative Proposal, subject to agreement of terms and contract, is for the provision of funding for the construction of the Tendrara Gas Export Pipeline ("TGEP") connecting Tendrara to the GME pipeline of between US$60 million and US$100 million. The Company currently estimates the gross capital cost of the TGEP pipeline to be approximately US$60 million for a 12 inch pipeline and US$100 million for a 20 inch pipeline.
On 12 September 2017, the Company announced the completion of the acquisition of various licenses in Eastern Morocco from OGIF (the "Acquisition") outline above. As a result, the Company now holds a net 47.5% position in the Tendara and Anoual petroleum agreements and Matarka reconnaissance exploration license, in exchange for 272 million new ordinary shares to OGIF.
This announcement is inside information for the purposes of Article 7 of Regulation 596/2014.